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Closeouts for All

Mar 1, 2007

Many suppliers of closeout merchandise are breaking down truckloads and even pallets to make buying easier and more affordable for small and midsize independent retailers. All retailers can acquire everything from first quality product in original packaging, to seconds and salvage.

The latter sells for a larger discount, while first quality goods are still priced significantly below the original wholesale price. The products available range from designer apparel brands and other high end merchandise to boxes that mix a variety of unbranded cheap stuff, with an occasional gem.

While Discount Wholesalers Inc., in Chester Springs, PA, carries everything from first quality closeouts and liquidations to customer returns, the overwhelming majority, "95 percent of it is name brand, first quality," says Steve Galiffa, owner. "All of it is clean, sellable merchandise," he adds.

While the company carries virtually all merchandise categories, health and beauty aids is its greatest strength and the most in demand lines, according to Galiffa. Other categories include apparel, giftware, hard goods, tools and cleaning products. "We're always looking for new sources to buy from," he says.
There is no minimum order. The company sells all quantities, from truckloads to pallets to boxes, and its customers range from flea market vendors to retail chains with 150 stores or more.

Galiffa and his staff will help steer a new retail customer to the kind of merchandise that will do best in their own area and type of operation. In all cases, Discount Wholesalers provides an itemized list of contents. "We'll even provide a photo if someone wants a closer look," he says. In health and beauty aids, customers can often order by merchandise category or obtain mixed lots.
My Bargain Bin, New Castle, DE, is another supplier that handles a wide range of merchandise categories, although novelty jewelry is its primary category, according to Sandy Spector, who owns the company with her husband, Mike. "We sell anything we can get at a good price," she says.

Among the categories are sunglasses and reading glasses, religious items, light up products of all kinds, men's wallets and ladies' purses and scarves. There is no minimum order. Retailers can buy a dozen of one style or a whole case of mixed product. Goods are first quality, consisting of shelf pulls, overstocks and manufacturer overruns.

"We have tiered pricing, depending on the size of an order," Spector says. "But we don't want to cut out the smaller retailer. Established buyers know what they want. When a novice retailer calls," she says, "we ask a lot of questions, so we can gear them toward a mix that will succeed in their area of business."
Some product is branded and others are not. If a customer wants only gold chains, My Bargain Bin will provide just that. Its staff will tell a buyer where the products are manufactured and describe it by type. The company also sometimes offers product with displays, or will direct buyers to sources of displayers.

Clothesouts-N-More, based in Granville, NY, specializes in apparel. "All is first quality, high end, brand name merchandise," says Mike Teolis, a principal in the company, which is headed by his wife, Jeanne. "These are all new shelf pulls; there are no customer returns or fillers."

To accommodate smaller retailers, Clothesouts-N-More has just instituted a six pack program. It allows retailers to buy product in six piece lots; six pants, six tops, etc. They will all be of the same brand and same style, but in different sizes and colors. While these six packs wholesale for more than the company's usual discount, the company pays shipping on all orders.

Teolis says a typical pants six pack would wholesale for about $10.99 a pair, and pairs would generally retail for $40 to $50 a unit. By contrast, an order for 50 pieces would wholesale for about $460 total, including shipping, and retail for an aggregate of about $2,150.

Inventory changes weekly, and brands are listed on the company's website. Between 2,000 and 10,000 pieces are in stock at any given time in a mix of well over 100 different sizes and styles. The staff will describe the contents. "We don't want to ship winter coats to a dealer in Florida," Teolis says. The staff also tells what season the merchandise is for and can provide certain guarantees, he says.

Another supplier of primarily first quality overstock merchandise, including apparel, from major department stores is JD Closeouts in Plantation, FL. It also carries housewares, domestics and shoes.

To accommodate smaller retailers JD Closeouts calls for a minimum order of 350 pieces. "Orders for much larger quantities get an additional discount of 10% to 15%," says Joe Beyhan, a principal.

The company provides extensive detail on the contents of an order, although Beyhan acknowledges that some of its suppliers are more explicit than others. "We keep approximately 1,000 pieces in our warehouse at all times," he says, "and any customer can come to the warehouse and inspect the merchandise." It includes high end designer brands and store brands. "We'll talk with retailers and guide them to merchandise that will do well in their area," he adds.
Retailers obtain the lowest wholesale prices when they buy salvage merchandise in large quantities, and that is the specialty of RJ's Discount Sales Inc. in Topeka, KS and Jacobs Trading Company in Plymouth, MN. Both carry mostly customer returns in a wide range of categories and sell primarily in truckloads. And both provide buyers with a general description of contents and emphasize that it contains some damaged goods.

"Our prices run about 15 to 35 percent of wholesale," says Phyllis Garvin, chief executive officer of RJ's, and explains, "that's as much as 75 percent below the normal wholesale price. The condition of product varies," she notes, adding, "many retailers prefer buying that way."

She always provides information explaining that product is, "as is," and, to make sure buyers understand that, she obtains their signature on a document that spells it out. She also encourages new retail customers to ask her, as well as any other supplier, for references.

"We gladly provide new customers with references to regular customers of ours," she says, "and, if they are new to the business, we suggest they visit some salvage stores." Garvin also advises buyers on what kinds of merchandise is usually in better shape than others.

"Paper goods are generally in excellent shape," she says. "I'd never suggest buying a banana box of groceries, however. That usually contains a lot of out of date product and containers that have been broken open. If a buyer pays $10 a box for groceries, he'll get good, in-date product."

Jacobs Trading carries all categories except food, says Howard Grodnick, president and chief executive officer. "When product is brand new, we provide a very detailed manifest. With salvage, we typically tell how many pallets are toys, how many are housewares and so forth.

"We want to undersell salvage loads," he says. "We'd rather customers have low expectations and are pleasantly surprised." With electronics, he says, "we only sell to a customer who has the ability to fix the products, put in new components and such. We qualify the buyer, and if he's not able to make these minor repairs, we say No."

When buying closeouts these suppliers urge retailers to obtain references and do some due diligence before paying the bill. All note that the Internet, while useful, has opened the door to unscrupulous operators who may have a fancy website, but no, or bad, product.

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